The World Bank Essential Health Services Access Project (P149960) REPORT NO.: RES40611 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ESSENTIAL HEALTH SERVICES ACCESS PROJECT APPROVED ON OCTOBER 14, 2014 TO REPUBLIC OF THE UNION OF MYANMAR HEALTH, NUTRITION & POPULATION EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Acting Country Director: Gevorg Sarsgyan Regional Director: Daniel Dulitzky Practice Manager/Manager: Enis Baris Task Team Leader(s): Hnin Hnin Pyne, Nang Mo Kham The World Bank Essential Health Services Access Project (P149960) ABBREVIATIONS AND ACRONYMS IPF Investment Project Financing OAGM Office of the Auditor General of the Union The World Bank Essential Health Services Access Project (P149960) BASIC DATA Product Information Project ID Financing Instrument P149960 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 14-Oct-2014 31-Mar-2021 Organizations Borrower Responsible Agency Republic of the Union of Myanmar Ministry of Health and Sports Project Development Objective (PDO) Original PDO The Project Development Objective (PDO) is to increase coverage of essential health services of adequate quality, with a focus on maternal, newborn and child health (MNCH). Current PDO The Project Development Objective (PDO) is to increase coverage of essential health services of adequate quality, with a focus on maternal, newborn and child health (MNCH), and, in the event of an Eligible Crisis or Emergency, to provide immediate and effective response to said Eligible Crisis or Emergency. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-55420 14-Oct-2014 05-Feb-2015 08-Apr-2015 31-Mar-2021 100.00 71.68 18.83 The World Bank Essential Health Services Access Project (P149960) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The Myanmar project portfolio has a recent history of late submission of audit reports. Challenges with respect to the compliance with the six-month requirement for submission of audit reports arise in Myanmar largely on account of the need to align with country systems, delays due to low capacity and/or complexity of implementation arrangements. These are discussed further below. The majority of project implementing agencies have been able to submit their audited financial statements within a 2 to 3-month period after the current six-month deadline. Therefore, the proposed extension of the deadline to nine months after the end of the financial year should ensure the project financing agreements covenant for submission of audit reports will be fully complied with. 2. However, there are two projects (Essential Health Services Access Project (P149960) and Decentralizing Funding to Schools Project (P146332)) where longer delays have been experienced. The delays are primarily due to the late submission of project financial statements to the Office of the Auditor General of the Union (OAGM) for audit by the implementing agencies. These two projects are both IPF with Disbursement Linked Indicator components, and they are being implemented nationally. The financial statement preparation process takes time as the manual accounting records from the subnational levels need to be accumulated, reconciled and consolidated. There is targeted ongoing work to automate the process which will continue. It is expected that this work will result in both improved accuracy/reliability of the financial information and a substantial reduction in the time taken for financial statement preparation for future years. 3. There are also other challenges apart from financial statement preparation which are impacting on compliance with the six- month requirement for submission of audit reports: (a) The current practice of the OAGM is not to commence any audit work on the project financial statements until after the project implementing agency has submitted them for audit and then they complete detailed transaction testing of up to 100 per cent; (b) The current OAGM practice of only producing audit reports in the Myanmar language. The financing agreement requires that the audit reports be in English. This has meant that the implementing agencies have needed to get their audit reports translated and then have the translated English version certified by the OAGM which has resulted in further delays1; (c) The OAGM capacity is becoming increasingly stretched. This is because of a combination of a broadening of the OAGM’s mandate to include performance audit, increasing demands from other development partners to audit their projects financial statements and recruitment difficulties due to competition from the private sector. II. DESCRIPTION OF PROPOSED CHANGES 4. In the light of the prevailing country practices/conditions and with the objective of maintaining full alignment with the country systems, the approval from the Country Director, to extend the timeline of the submission of the audit reports for 1This has not impacted on the audit report delays as Financial Management has reviewed and updated PRIMA on the date the Myanmar language version has been received. However, the formal acknowledgement letter has only been sent to the implementing agencies on receipt of the OAGM certified English version of the audit report. The World Bank Essential Health Services Access Project (P149960) the Myanmar project portfolio to nine months for all active projects (listed in the table below), starting with audit reports due for FY2020, is being requested. All projects negotiated after February 5, 2020 will use the flexibility provided by Bank Policy on IPF in terms of determining the timing of the audit report submission. As of February 14, 2020 Myanmar, has a portfolio of 14 active investment lending projects with a total of 19 separate audit reports. The projects’ financing agreements all included an audit report submission deadline of six months after the close of each financial year. 5. Reference is also made to the meeting between the Recipient’s Deputy Minister, Ministry of Planning, Finance & Industry and representatives of the World Bank on February 5, 2020, where the Recipient requested that the World Bank extend the due date of the audited financial statements for various investment lending projects from six (6) months to nine (9) months after the end of the Recipient’s fiscal year. Table: Myanmar Investment Lending Portfolio- Projects where in future the nine-month requirement for submission of Annual Audited Financial Statements will apply Project Project Name Implementing Agency Financing Source ID P146332 Myanmar Decentralizing Funding to School Project DBE IDA5455+TF17814 P157231 Myanmar Decentralizing Funding to School Project DBE TFA4986 P143988 Electric Power Project EPGE IDA5306 P152936 Myanmar National Electrification Project MOEE IDA5727 P152936 Myanmar National Electrification Project DRD IDA5727 P147629 Agricultural Development Support Project DOI, DOA IDA5624 P154389 Myanmar Financial Sector Development FRD IDA5930 P154389 Myanmar Financial Sector Development CBM IDA5930 P144952 Modernization of Public Finance Management MOPF IDA5402+TF17910 P144952 Modernization of Public Finance Management OAG IDA5402+TF17910 P149960 Essential Health Services Access Project MOHS IDA5542 P132500 Myanmar National Community Driven Development DRD IDAH8140 Project IDA56870 P166734 Myanmar National Community Driven Development DRD TFA7173 Project – DFID Additional Financing P158194 Myanmar Flood and Landslide Emergency Recovery DOH IDA5889 Project The World Bank Essential Health Services Access Project (P149960) Project Project Name Implementing Agency Financing Source ID P158194 Myanmar Flood and Landslide Emergency Recovery DRRD IDA5889 Project P160931 Myanmar South East Asia Disaster Risk Management Treasury Department TFA5031+IDA6080 Project P160931 Myanmar South East Asia Disaster Risk Management YCDC IDA6080 Project P145534 Telecommunications Sector Reform Project PTD IDA5353 P146482 Ayeyarwady Integrated River Basin Management DWIR IDA5559 Project P156124 Myanmar EITI Implementation Project MOPF TFA6310+TFA1901 III. SUMMARY OF CHANGES Changed Not Changed Components and Cost ✔ Financial Management ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ The World Bank Essential Health Services Access Project (P149960) Legal Covenants ✔ Institutional Arrangements ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component 1: Strengthening Component 1: Strengthening Service Delivery at the Primary 84.00 No Change Service Delivery at the Primary 84.00 Health Care Level Health Care Level Component 2: Systems Component 2: Systems Strengthening, Capacity Building, Strengthening, Capacity 12.57 No Change 12.57 and Project Management Building, and Project Support Management Support Component 3: Contingent Component 3: Contingent 3.43 No Change 3.43 Emergency Response Emergency Response TOTAL 100.00 100.00 .